Aims and Objectives of Tesco and McDonalds

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Unit 1 - Investigating Business. Myles Howson. 11G.

Section A.

In section A I will introduce you to my two chosen businesses and give you a thorough account of each organization’s activities; he detailed analysis of how these may need to adapt in order to ensure that aims and objectives continue to be met over time.

Introduction to Tesco.

“Tesco UK was founded in 1919

The founder of Tesco was Jack Cohen. After serving in the Royal Flying Corps during the First World War, 21-year-old Jack decided to invest his service man's gratuity of L30 in NAAFI surplus groceries to sell from a stall in the East End of London. His first day's turnover was L4, and his profit L1. His business has been growing up successfully.

The first own-label "TESCO" product in 1924

First in 1924 there appears the current business company Tesco comes from the initials of the joint-owner T.E. Stockwell, who supplied the firm by tea (the first Tosco labelled product), and from first letters of Jack´s COhen surname.

The first shop opened in 1929

The first warehouse opened in 1934

The first 100 branches by 1939

Tesco comes to Central Europe in 1994”

[Text obtained from http://www.tesco-shop.cz/en/about.asp]

Introduction to McDonald’s.

“Is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each day. More than 70% of McDonald's restaurants worldwide are owned and operated by independent local men and women.

Is one of the world's most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of the informal eating-out market in virtually every country in which we do business.

Serves the world some of its favorite foods - World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin.”

[Text obtained from http://www.mcdonalds.com/corp/about.html]

Theory on aims and objectives.

First of all why do businesses exist in the first place? Well all businesses exist for one reason, to make a product or offer a service. Some businesses may do both. All businesses need to make an income from what they are offering to be able to carry on, this means whatever they make or offer it has to be something consumers or industry will pay to own.

Business aims.

An aim is something a business would like to achieve. A business may only have one aim but others may have more than one:

In the private sector a business will aim to make a profit. Where as in the public sector a business would aim to make a profit where possible and also aim to meet strict expenditure targets.

No matter what sector a business is in they always aim to provide a product or service to either their local community or to the wider community.

If a business is having a hard time making profit they may simply aim to survive.

If a business is doing well they may aim to expand their business.

Frequently businesses aim to maximise their sales. This simply means selling as much as possible.

Some businesses aim to have a very competitive service, so more people will use their service than their competitors.

Now a high percentage of businesses aim to make their business as environmentally friendly as possible.

Most businesses try to have as little aims as possible as it is easier to keep them on track because they can target their efforts more efficiently.

Business objectives.

Everybody has aims, even if its to be more healthy or improve at a sport. But to make sure that you complete your aim you have to take specific steps towards them. At first you have to come to a decision on what these steps are then you have to follow them. You also need to find a way to measure your aims so you can ensure that you are on target of completing your aim.

Businesses need to do the same thing. They need to use these specific steps. They are called objectives. A business may try to:

Sell more products or services than any of its competitors.

Possibly provide industry or the general public with more services than the past year.

They may want to develop an old good or create a new one.

They may also want to improve a service.

Then the business has to work out how to achieve its objectives. It is important that the business can measure the progress of an objective otherwise it will not know when it has achieved them.

You can simply achieve this by having “measurable objectives”. Instead of saying you will train more to become fitter you would say that you will train an extra hour a day for a number of weeks. This way it is easier to see if you are exceeding. The best types of objectives are “SMART” objectives.

S - specific

M - measurable

A – agreed

R – realistic

T – time constraint

What is business activity?

Business activity is basically what the business gets up to. It is the work the business carries out.

Tesco aims and objectives.

Tesco aim to become/stay there leading retail supermarket and provide good quality services and products at a low cost so that they are cheaper than their competitors.

By looking at Tesco’s mission statement I will be able to account for most of Tesco’s aims and objectives that have been made public. I will be able to identify whether the aim is long-term (Over a period of years) or short term (over a period of months). But Tesco’s aims and objectives can be changed because of external influences on the business. (See section D).

Objective one - to maximise sales and with doing so increase their profits. If Tesco to maximise their sales the second half of the aim (increase their profits) will happen on its own. Tesco may try to maximise their sales by cutting prices, more in store deals, expand existing stores sell more stock can be held and build new stores to attract more customers.

Objective two – decrease their prices. Tesco aim to make shopping cheaper for the average household. They aim to do this by cutting prices and offering more in store deals. They may have many different objectives in order to reach this aim. One objective they may use is offering customers bargains, like to buy one get one free, by two and get the third free and a percentage off the original price.

Objective three – introduce more healthy eating products into the wide range of groceries they supply. The advantage of introducing more healthy living products is that Tesco will; attract many more customers that are interested in healthy eating products, make Tesco an established business four providing healthy eating products. Tesco aim to create a wide range of healthy eating products from organic turkeys to healthy living ready meals.

Objective four – Tesco aim to develop a large Internet shopping site. Tesco aim to provide groceries, electronics and clothing goods as well as a number of their services online. Tesco are aiming to develop the online shopping experience, if they are successful in doing so they may attract many more customers which will help them achieve objective one. This will help them achieve objective one because by attracting new customers that are unable to shop in store they will gain more sales which means they will maximise profit.

Objective five – to provide jobs to their local community. Tesco aim to reduce the unemployment in local areas where Tesco Stores are built.

Why Tesco’s aims and objectives change over time.

Tesco may need to change the aim to objectives over time. This is due to external influences on the business. For example if Asda open a store only ½ mile away from a Tesco store then sales of the Tesco store could drop. If this was to only happened to 30% of Tesco Stores then this could have a dramatic affect on sales of Tesco. This will affect Tesco’s aims and objectives not only on store location but on how they advertise the stores and products. Another example of why Tesco may have to change the aims and objectives is what if more and more people from the public decide to start eating healthy eating products. This would mean Tesco would have to provide these products for the community. This would mean they have to change their aims towards the type of Food Products they sell and how they promote them.

How Tesco’s objectives are SMART.

“Although we have seen a slight increase of 3.7% in the staff accident rate within distribution, we have already taken positive steps to address the increase and we are confident that over the longer three-year cycle we will meet the target.”

[Abstracted from Tesco health and safety statement]

This objective is a smart objective because:

It is specific; it clearly states that they have “seen a slight increase of 3.7% in the staff accident rate within distribution” and that they are already taking steps towards tackling this and are confident that they will meet it. They know exactly what there target is and are aiming straight at it.

It is measurable; Tesco are measuring this with precise figures. They have stated that they seen a “slight increase of 3.7% in the staff accident rate”. This tells me that they are recording accidents and measuring progress. I feel that this is a positive step towards tackling health and safety within the Tesco distribution.

It is agreed; Tesco will make sure that all the employees of the Tesco distribution will be aware of this aim and what Tesco are doing to achieve the aim. Tesco will make sure that all employees comply with precautions put in place to keep the accident rate low.

It is realistic; Tesco know that this is a realistic aim because there customer accidents and staff accidents within stores are down by a high percentage. So Tesco realise that it is realistic to be able to reduce injuries within distribution by putting extra precautions in place.

It is time constraint; Tesco have set themselves a 3 year period in which they want to achieve this aim in. So this means hat the aim is time constraint to 3 years.

So this is a smart objective.

Tesco’s business activity.

Tesco’s core activity is selling groceries to the public. The efforts of the business revolves around this particular section of the business. Selling groceries is the part of the business that Tesco make most of their profit. But Tesco to have many other activities, they are as follows; selling electronics, selling clothes, and children’s toys. Tesco also manufacture because they make their own bread in store and sell it. They also make a wide range off Tesco own make products. But not only do they make groceries they also make the own brand of electronics (technika) and it their own brand clothes (cheroke). They provide transport to transfer stock from warehouses to stores and from stores to people’s homes (home delivery). Tesco also provide the following insurances:

Car insurance

Home Insurance

Motorbike insurance

Travel insurance

Pet insurance

Life Insurance

Health Insurance

Dental insurance

Tesco provide the following credit cards:

CLUBCARD credit card

Bonus credit card

Business credit card

Tesco provide personal loans and mortgages.

Tesco provide the following saving accounts:

Internet saver

Instant access savings

Child trust fund

Tesco provide the following services for travel:

Travel insurance

Travel money

Euro car breakdown cover.

How Tesco’s business activity helps them achieve their aims and objectives.

Tesco’s core business activity is providing services and selling goods. If Tesco did not do this for their business activity then they would not be able to; decrease their prices, introduce healthier eating, develop a large internet shopping site or provide jobs to local community. An example of this is; if Tesco did not sell groceries or provide services then they would not be able to develop a large internet shopping site. Because for Tesco to develop this website they have to provide these services and groceries.

How communication helps Tesco achieve their aims and objectives.

Communicational helps Tesco achieve most of the aims they set themselves. Tesco use many different types of communication to advertise their products. The different types of communication they use are; television adverts, Internet Services, receipts, leaflets, possibly local radios and job centres to advertise new jobs. Tesco spend huge sums of money annually advertising the products and services they provide. Not only will this keep current customer’s shopping at Tesco it has the advantage of attracting new ones. This will help Tesco achieve the aim of maximising profits. To advertise the new job vacancy they have to communicate with the local community, by doing this they will be able to find a well suited person for the job. This means that communicating with the public helps Tesco maximise their profits and provide jobs to the local community. Tesco have to communicate with their suppliers in order to keep the shelves full. This is a vital piece of communication because if there is a lack of it Tesco’s shelves will not be full all the time meaning they will have no goods to sell. They do not want to disappoint customers otherwise customers will start shopping elsewhere.

Tesco use communication to pass on information to the staff to keep them happy and inform them about things they need to know. It is important they communicate with the staff in order to keep them happy so that they are polite and kind to all customers. Tesco staffs have also got to communicate with customers when customers need to know something. Tesco will also have to use communication when they need to negative tell staff something negative for instance when they breach their contract and have to have a warning. This will help Tesco maximise their sales because customers will return to a pleasant atmosphere.

Tesco use graphical communication in Board of Directors meetings to show profit and loss, annual and monthly profits and a general overview of the business. This type of communication helps Tesco because they can determine whether they are on track or off track meaning they can do something about there status.

Tesco use written communication to communicate with the customers that have Clubcard’s to inform them about deals they are eligible for and coupons that the valid for them.

All these different types of communication are important to help Tesco meet the aims and objectives and become a stronger and more powerful business today.

McDonald’s aims and objectives.

McDonald’s main aim is to “Lead the Quick Service restaurant market by a programme of site development and profitable restaurant openings”.

[McDonalds mission statement]

McDonalds also have many other minor aims which are as follows:

· Our People: Achieve a competitive advantage through people who are high calibre, effective, well motivated and feel part of the McDonald’s team in delivering the company’s goals.

· Restaurant Excellence: Focus on consistent delivery of quality, service and cleanliness through excellence in our restaurants.

· Operating Structure: Optimise restaurant performance through the selection of the most appropriate operating, management and ownership structures.

· The Brand: Continue to build the relationship between McDonald’s and our customers in order to be a genuine part of the fabric of British society.

[McDonald’s mission statement]

These aims and objectives simply tell us that McDonalds want to be the largest fast food restaurant, have excellent well trained staff working for them, have clean and tidy restaurants, have a good management and business structure and have a respected brand name.

McDonalds also have three main aims and objectives concerned with being environmentally friendly. They are; conserving and protecting the world’s natural resources, effectively managing solid waste and ensuring responsibility procedures.

Why McDonald’s aims and objectives change over time.

McDonald’s may need to change the aims and objectives over time depending upon external influences on a business. As we have seen over the past few years McDonald’s have been introducing more and more healthy eating products into the wide range of fast foods they provide. This is because more people from the public have been getting conscious about healthy eating. This is a perfect example of how the McDonald’s aims and objectives will change over time. There can be many different reasons why McDonald’s aims and objectives will change over time. See section D for more information on external influences which will cause McDonald’s to change its aims and objectives.

McDonalds business activity.

McDonalds is in the tertiary sector because its core activity is providing a service to the public.

McDonald’s core activity is providing fast food to the public. However this is not there only activity, they also; extract raw materials to make their food products, and they transport their own products. McDonalds also franchise restaurants.

How business activity helps McDonalds achieve their aims and objectives.

Many people go to McDonalds to buy a “BIG Mac burger”. But this would not be possible if McDonalds stopped providing them. But now many people want to try something different. So McDonalds have started making new burgers and other meals which helps them to achieve their aims of providing fast food to the public and maximise profits.

How communication helps McDonald’s achieve their aims and objectives.

McDonald’s use communication in everyday business activities in order to achieve the aims and objectives they have set for the business. Again just like Tesco, McDonald’s use; television adverts, Internet Services, receipts, leaflets and possibly local the radios to advertise the business and new jobs. By using television adverts McDonald’s are able to attract more customers by advertising the new healthy eating range on TV. Because they advertise the new healthy eating range on TV they are appealing to more customers than they could without television adverts, they are also attracting many new customers that the only interested in healthy eating.

Internal communication amongst staff and management is also a vital part that helps McDonald’s achieve its aims and objectives. McDonald’s will use a varied type of communication amongst staff to transfer information between not only staff but customers as well.

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and pursued the customer to buy it by using added value e.g. happy meal {get a free toy} this is a perfect example of added value 'this attracts kids so they buy it. At McDonalds customer service is another department as they aim to satisfy all their customers as well as they can so they will get repeat business.

This involves using assets of Tesco's and resources. These are: * Buildings and land, such as offices, factories, shops. * Equipment, such as vehicles, computer, machinery * Materials, such retailing products * People, such as managers, support staff etc... Tesco make sure that the products and services are provided to customers at an above satisfactory standard.

Human Resources Dominos human resource department try to recruit the best employees and make sure they work effectively and safely for them to achieve its aims and objectives. It also has to carry out a number of activities. It try's to keep existing employees as training a new recruit can be very expensive.

Profit maximisation: Profit maximisation is likely to be an important objective for most companies which shareholder including McDonald's owns. Profit refers to the extent to which revenues exceed costs, so profit maximisation occurs when the difference between sales revenue and total costs is greatest.

Perhaps promotion prospects are blocked in the organisation so that people are leaving. Staff turnover It is important; therefore, to be able to plan retirements within McDonald's so that they keep a good balance between people who have been in the organisation for a long time and people who are bringing new ideas into the organisation.

It is then delivered to their home. There are a lot of different offers around the store for different products. This is in the interest of the customer as it attracts more people to shop at Tesco as they are going to get value for money products and shop their in the future to take advantage of these offers.

* Can easily create a report with customer. * Has the ability to exploit niche market. * No Set up for procedures. Disadvantages: * The owner has unlimited liability. * The profits get ploughed back into the business. * To expand the business, financing needs to be found.